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Apple Computer Corporate and Business Strategy
versions. This remains a critical competitive issue that needs to be addressed.
Critical Issues & Recommendations For Action
The major issue facing Apple executives is how to return the company to profitability and regain market share. Although the entire industry contracted in 2001, sales for Apple declined by 32% while Dell’s sales increased and Compaq, HP, and IBM revenues were reduced by 21%, 7%, and 3% respectively. Apple lost strength in every market segment including its core niche markets and the company still lacked mainstream consumer awareness and adoption. Consumers weren’t buying into the premium price tag associated with Apple’s differentiation strategy and a major hurdle existed in overcoming the widely accepted perception that Apple computers were incompatible with major software vendors. Supplementing these issues are Apple’s operating costs. Apple failed to initiate cost containment counter measures during the industry wide contraction period. In fact operating cost increased during 2001 even though sales decreased by 30%.
Going forward, should Apple appeal to the mass market or entrench during economic uncertainty and focus on their niche market strongholds? Can Apple compete on cost with its PC counterparts or will they always be regarded as the “BMW” of personal computing?
My recommendations for action will be based on an analysis utilizing the Balanced Scorecard approach developed by Robert Kaplan and David Norton. Central to this approach is vision and strategy. This approach will attempt to complement financial measures with operational measures on customer satisfaction, internal processes, and the company’s innovation and improvement activities. These measures are the drivers of future financial performance.
Apple’s corporate mission or vision is to deliver a highly innovative and superior solution to a customer’s personal computing needs. This vision is strategically accomplished by differentiating Apple from its competitors on the basis of quality, design, performance, and peripheral integration, hence the term “Digital Hub.” With this vision and strategy in mind, we now will examine the four elements to the scorecard approach: customer perception, internal business perspective, innovation perspective, and financial perspective. (See Exhibit 9)
How do customers see Apple on the basis of quality, performance, service, and cost? Apple’s customer base is unparalleled in loyalty and satisfaction. Customers view Apple as the only integrated alternative to the chaotic interoperable PC alternative. When paired head to head with a PC, Apple fairs very well, much better than what its current market share demonstrates. Therefore actions need to be taken to change the market’s perception. The objective here is to communicate to the various market segments what Apple’s current customers feel about their computing “experience.” Apple needs to overcome the myth that its products are severally limited on the software side. To do this, Apple needs to leverage its value added marketing competency and initiate a testimonial like campaign that [next page]